5 Best Startup Business Loans

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A small business loan may be the obvious next step for your firm, whether you need extra money for emergency expenditures or you’re ready to grow. You’ll want a low-interest company loan that won’t suffocate you with needless costs.

5 Best Startup Business Loans

Traditional bank lenders usually provide the lowest interest rates for business loans, but they may not be the best option for every company. There are many non-bank lenders claiming to provide comparably cheap rates these days, but finding the correct one might take some effort and investigation. Fortunately, we’re here to assist you in narrowing down your choices.

Let’s look at how to get a low-cost company loan in 2021.

What Are Low-Interest Business Loans?

Low-interest business loans are just that: loans with interest rates that are lower than the category’s median.

While fees, your total borrowing amount, and the repayment terms of your loan all play a part in establishing your payment amounts and overall cost of borrowing, interest rates are the most important factor in calculating your cost of borrowing. The lowest loan rates go to the most creditworthy borrowers who have established enterprises with consistent earnings.

If the business owner doesn’t know where to search, even the most eligible company might be lured into a high-interest loan. It’s all too simple to sign up for a loan that’s too pricey because of the promise of rapid approvals, quick money, and minimal paperwork.

Low-Interest Business Loans at Their Finest

Businesses went through a lot in 2020, and a low-interest business loan might be precisely what they need to keep going. SmartBiz, StreetShares, Funding Circle, and others are among our top picks for the finest low-interest business loans.

1. SmartBiz: Best For SBA Loans With Low Interest Rates

SBA loans are a great choice for firms that require a long-term loan with a low interest rate. You might be shocked to learn that you don’t have to acquire one from a bank. SmartBiz can assist you in navigating the long and laborious process of obtaining an SBA loan.

You may borrow anything from $30,000 to $350,000 with a SmartBiz working capital/debt refinancing loan. The annual percentage rate (APR) ranges from 9.02 percent to 10.26 percent, with payback durations of up to ten years. The money from the loan might be used to buy goods or equipment, start a marketing campaign, cover operational costs, or recruit more people. You can also refinance high-interest business debt with your funds. 

You can also refinance high-interest business debt with your cash. After approval, you may get your money in as little as seven days.

SmartBiz also offers SBA loans for commercial real estate for business expansion. APRs range from 6.62 percent to 6.66 percent on loans ranging from $500,000 to $5 million. The repayment period might go up to 25 years. The money from the loan might be used to buy commercial property or refinance an existing business mortgage. After credit approval, you might have money in as little as 30 days.

You must have been in business for at least two years to qualify. A personal credit score of at least 650 is required, as well as sufficient cash flow to meet your new loan monthly. 

Bankruptcies or foreclosures within the previous three years, existing tax liens, and prior failures on government loans must also be absent from your credit record. 

Pros

The majority of the time, the rates are low.

Terms and pricing are excellent.

Customer service is available in a variety of ways.

Cons

There are some extra charges.

The application procedure is lengthy and time-consuming. 

2. StreetShares: 

The Best Low-Interest Loan For Companies That Have Been In Business For 12+ Months

StreetShares is a website that provides short-term instalment loans and credit lines. This lender caters to veterans, but you do not have to be one to apply.

Installment loans from StreetShares range in size from $2,000 to $250,000, with payback durations ranging from three to 36 months. Installment loan APRs start at 7% for the best borrowers and go up to 39.99 percent for the worst. Your instalment loan is repaid in weekly instalments.

You may also apply for a $5,000 to $250,000 credit line. The repayment period ranges from three to 36 months. APRs on credit lines range from 7% to 39.99 percent. 

You’ll be charged 2.95 percent of the total borrowing amount for any withdrawal from your line of credit. Lines of credit are paid back in weekly instalments.

You must have been in business for at least one year and have a minimum revenue of $25,000 to be eligible for StreetShares’ financial products. You are only allowed to borrow up to 20% of your annual income. You’ll also need a credit score of at least 620.

Pros

Borrower criteria are lower than those offered by banks.

The majority of the time, the rates are low.

There are no consequences for paying in advance.

The application procedure is simple and quick.

Cons

Inconsistent customer service

3. Funding Circle: 

Low-Interest Business Loans For People With Good Credit

Peer-to-peer lending has provided new options for many company owners to get inexpensive loans. Funding Circle is one of the best places to go if you’re looking for low interest rates.

You can borrow anywhere from $25,000 to $500,000 through Funding Circle, with repayment terms ranging from six to sixty months. The most creditworthy customers can get rates as low as 4.99 percent. Borrowers with poor credit may be eligible for rates as high as 22.99 percent.

A loan from Funding Circle can be used for anything. These loans are very popular among franchisees. 

You must have been in business for at least two years to qualify. You must have a credit score of at least 620. Borrowers with higher credit scores will qualify for lower interest rates. The majority of customers receive their cash within 10 days of submitting their application with this lender. 

Pros

Excessive borrowing

Repayments on a monthly basis

There are no consequences for paying in advance.

A few extra charges

Cons

Borrower qualification may be difficult to attain.

Financing may not be available in all states.

4. LoanBuilder:

 The Best Low-Interest Loan For A Business That Has Been Open For Less Than 12 Months

PayPal’s LoanBuilder is a service that lets you “create” a business loan with the amount and conditions that are right for you. Borrowers with credit ratings as low as 550 can use LoanBuilder. Borrowers with good credit are more likely to get accepted for larger loans with reduced costs.

LoanBuilder differs from some of the other lenders on our list in that it does not charge an annual interest rate on their loans. Instead, you’ll pay a single, pre-determined cost for borrowing. LoanBuilder offers loans ranging from $5,000 to $500,000, with money accessible as soon as one business day following approval. 

There are no hidden costs or origination fees. Instead of paying interest, you’ll pay a single set charge that starts at 2.9 percent of the loan amount. Borrowers with less than perfect credit may be eligible for loans with costs as high as 18.72 percent.

You must have been in business for at least nine months and have a minimum yearly revenue of $42,000 to qualify for a LoanBuilder loan. You must not have any open bankruptcies on your credit report, and your personal credit score must be at least 550, however borrowers with high to outstanding credit are eligible for the lowest costs. 

Pros:

Minimum credit score requirements are low.

There are no hidden costs.

Cons: 

The application procedure is quick and simple.

There are no early repayment reductions available.

It is necessary to get a blanket lien.

5. Accion: 

The Lowest-Interest Business Loan For People With Bad Credit

Accion is a nonprofit lender with minimal entrance requirements for small enterprises, especially those in one of its specialist areas. Initially, the company focused on providing low-income communities across the world with microloans and financial education. Since then, Accion has stayed true to its mission of improving local communities by lending money to startups and other businesses that might not otherwise be eligible for financing.

To qualify, all you need is a credit score of 575 (550 in some areas), sufficient cash flow to repay the loan, and current on your payments.  

Accion provides loans ranging in size from $300 to $250,000. The annual percentage rate (APR) ranges from 7% to 34%, which includes a 3% to 5% origination charge.

Pros

Minimum credit score requirements are low.

Qualified startups can apply for funding.

Repayments on a monthly basis

Cons

Quick and simple application

There are some extra charges. 

Final Thoughts on Low-Interest Business Loans

Understanding the overall cost of borrowing is one of the most important aspects in applying for and accepting a loan. Accepting a high-interest loan with several additional costs, even if you’re in a tight financial condition, can be financially damaging to your company. There’s no need to take a high-cost loan if you have a good credit score.

Examine your alternatives for low-cost business loans and apply with a trustworthy lender to get the ideal loan for your small firm’s growth or start.

Check out our step-by-step guide to securing a business loan when you’re ready to get started. 

In conclusion, the best low-interest business loan options are:

SmartBiz: Best for SBA loans with low interest rates.

StreetShares : Best option for low-interest loans for businesses that have been in operation for at least a year.

Funding Circle: Best place to go for low-interest business loans for those with good credit.

LoanBuilder: Best for low-interest loans for businesses that are less than a year old.

Accion: Best option for low-interest loans for those with terrible credit.

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